Meredith Whitney Is, Was and Ever Shall Be Wrong on Munis: Lebenthal

By Mark Gongloff

AP

It’s hard to believe that it will be a year ago tomorrow since Meredith Whitney’s firm produced a research report called “Tragedy of the Commons” that broke down how awful the municipal bond market was.

That report did not immediately cause a panic in the muni market, an oversight Ms. Whitney made sure to correct in the following months, most notably in a December appearance on 60 Minutes, when she told everybody to OMG SELL YOUR MUNI BONDS RIGHT AWAY.

Her TV prediction of 50 to 100 sizable defaults, amounting to hundreds of billions of dollars, has not yet come to pass. Meanwhile, muni bonds have been just about the best-performing asset class in the investment universe this year, up there with Treasurys and gold.

This has opened Ms. Whitney up to not a little bit of criticism, particularly from muni investors who are still smarting from her call last fall.

One of those, Alexandra Lebenthal of Lebenthal & Co., appeared on CNBC this afternoon to complain about the massive disruption Ms. Whitney caused in her market. She took a few swings at the woman who made a name for herself predicting trouble for bank stocks, but seems to have met her Waterloo, at least for the time being, in the muni market.

“She was wrong, she is wrong, and she will be wrong,” Ms. Lebenthal insists of Ms. Whitney in this video.

Meredith Whitney, for the damage she did to small naive investors who bailed out of the muni market and then watched it gain, should smoke a turd in hell. The ML Muni Master Index is up 9.5 percent this year, so far with more to go.

3:37 pm September 27, 2011

Anon wrote :

To those who defend her as "not wrong, just early":
Her being wrong in the past is non-debatable; she recommended investors sell one of the best performing asset classes. We'll only be able to judge if she was "early" if what she predicted (mass defaults) comes to pass.

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